What Is GAP, and What Can It Do for You?

There’s a lot to like about owning a new car—that is, unless it gets stolen or involved in a serious collision. In those situations, you might expect your car insurance policy to cover the remaining cost of your unsalvageable vehicle. Unfortunately, even the best plans may not cover the rest of your outstanding loan, creating a loan “gap” on the money you owe. That’s where Guaranteed Asset Protection (GAP) comes in.

What does GAP do?

If your car is totaled in an accident or stolen and not recovered, you should receive a settlement from your insurance company based on the market value of the vehicle. But this amount may not cover the rest of your loan. If there’s still money owed, GAP may help pay:

When is GAP useful?

you drive more than 15,000 miles a year (accelerating your car’s depreciation)

How can you buy GAP?

Many car dealers and auto insurance companies offer GAP, as well as some financial institutions. The cost can vary, depending on the value of your car and whether or not it’s a lease. In many cases, you’ll pay for GAP in one lump sum, which can cost up to $600 or more. Some companies offer GAP as a recurring monthly or yearly payment instead. In general, expect prices to be higher at car dealerships. At Navy Federal, GAP can be purchased at a flat fee of $299 during your loan application process.

Is GAP worth it?

If you’re purchasing a car with little or no money down, or if your car loan has five or more years on it, you could benefit from GAP should anything happen to your car. You may be required to purchase GAP if you have a car lease, but requirements vary and you may not be able to choose where you purchase GAP from.

Is there a GAP in your coverage?

Your auto insurance may not be protecting you completely. Navy Federal’s Guaranteed Asset Protection helps you fill in the gap. Learn more about the benefits of GAP and enroll today.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

Navy Federal Information

Mission Statement

Since 1933, Navy Federal Credit Union has grown from 7 members to over 8 million members. And, since that time, our vision statement has remained focused on serving our unique field of membership:

“Be the most preferred and trusted financial institution serving the military and their families.”

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